Conservation and community-oriented tourism development has been promoted in many developing countries, including Bhutan. A growing body of literature over the last three decades recognizes that ecotourism and community-based tourism foster livelihoods and other benefits for local populations. However, less is known about whether or not such types of tourism have made a difference in the social, economic and environmental wellbeing of rural communities in developing countries. In international development studies, scholars argue that a human wellbeing analysis offers a positive and holistic outlook by focusing on people's 'strengths' over 'needs' and emphasizing subjective as well as objective dimensions of growth and progress. Ecotourism and community-based ecotourism (CBET) present an alternative approach to development in their capacity to compromise between conservation and development goals. Yet their impacts on humans and nature are not well documented, making it difficult to know whether such projects can alleviate poverty while concurrently protecting natural resources. As the Bhutanese tourism industry is poised for tremendous growth in the near future, upholding the nation's commitment to develop in an effective and sustainable manner remains a challenge. This study analyses the current state of tourism in Bhutan, and explores the applicability of the wellbeing approach to tourism-related policy, planning, and development in rural areas.